A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specific asset, like a stock, at a predetermined price within a certain time frame. Investors buy put options when they believe the price of the asset will decrease, allowing them to sell it at a higher price than the market value. For example, if you own a put option for Company XYZ stock with a strike price of $50, and the stock drops to $30, you can still sell it for $50. This strategy helps investors protect themselves from losses in a declining market.